Summary of the Core Content
This article discusses how "Byte companies" (high-dimensional enterprises represented by ByteDance) approach the process of "distilling industries": These companies possess comprehensive capabilities such as traffic, AI, and data. Instead of directly entering an industry, they extract the structured core elements—such as user needs, transaction processes, and expert knowledge—and reconstruct them using technology. The article also identifies four types of dangerous scenarios for traditional enterprises and the "moats" that are difficult to overcome. Finally, it provides recommendations for small and medium-sized businesses to adapt, from accumulating experience to upgrading their leadership in order to withstand the impact of these technological advancements.
Detailed Analysis
1. What is "distilling an industry," and how is it different from previous cross-industry players?
"Distilling" refers to extracting the parts of an industry that are easiest to digitize and standardize, leaving the less valuable elements behind. For example:
- In the past, when Xiaomi entered an industry, it developed products and managed its supply chain itself (which came with challenges).
- Internet platforms entered by altering the transaction process (moving services online to generate revenue from traffic).
- Byte companies, on the other hand, target the "cognitive layer"—they convert the experience and knowledge stored in the minds of bosses, salespeople, and experts (such as negotiation scripts, service processes, and decision-making logic) into models that AI can execute. For instance, after DouBao integrated with the TikTok shopping platform, when you request a recommendation for an Android tablet, the system directly generates a product card and completes the purchase, eliminating intermediate sales and operational steps.
2. Which types of enterprises are most vulnerable to being "distilled"?
Four categories of enterprises are particularly at risk:
- Those that rely on information asymmetry: For example, real estate agencies (where only agents knew about available properties, but now AI can aggregate all information), or consulting firms (where clients can get answers directly from AI).
- Those that rely on sales scripts: Such as insurance sellers or live-streaming merchants (AI can learn and replicate their selling techniques more efficiently and continuously).
- Those with low-standard services: For example, renovation companies (where customers were previously deceived, but now AI can ask questions like "What is the basis for this quote? Are there better options?")
- Companies where the boss's expertise is critical: If all the company's capabilities depend on a single individual (e.g., the boss handling major clients), and there are no established processes or standards, an AI system that performs 70% of the work can be highly effective.
3. Why are Byte companies more formidable than their predecessors?
While previous competitors focused on "grabbing business," Byte companies aim to "empty out" entire industries by extracting their most valuable assets. They:
- Target the product layer (reengineering supply chains and reducing prices).
- Focus on the channel layer (digitalizing services).
- Tap into the industry's hidden, intangible assets (such as expert skills or decision-making logic) and turn them into replicable models.
4. Do traditional enterprises still have a chance?
AI is not omnipotent; there are six areas where they can still hold their own:
- Ceremonial or hands-on experiences: Such as haircuts (which require personal expertise) or cooking (where the taste of food depends on the method of preparation).
- Deep trust relationships: For example, between doctors and patients (long-term trust cannot be replaced by AI).
- Complex decision-making: Lawyers handling unique cases (each case has specific details that AI struggles to handle accurately).
- Aesthetic intuition: Creative designs (AI can generate images, but they lack emotional depth).
- Long-term relationships: Customer loyalty (which is not affected by lower prices from AI).
- Values: Customers' commitment to environmental-friendly practices (which reflects your company's philosophy).
5. How should traditional enterprises respond?
Don't give up or panic; focus on these four key actions:
- Don't rely on industry knowledge as a moat: Understanding an industry is just a prerequisite; what truly matters is solving unspoken customer problems (e.g., providing more than just selling furniture by also designing the space for them).
- Turn hidden expertise into tangible products: Document the processes and knowledge of your team (e.g., standardizing restaurant recipes) to create systems that can compete with AI.
- Shift from selling products to setting standards: For example, in the children's education sector, define what "good early education" means and become a leader in that field.
- Upgrade your leadership: Develop four essential skills: understand how AI works (without writing code), assess product uniqueness, encourage team learning, and maintain strategic focus.
Final Message
Industries will inevitably be transformed by AI, but you can choose whether to become just another component for AI to process or a model that AI must learn from. The key is to make your uniqueness something that cannot be replicated.